Filed: Aug. 10, 2012
Latest Update: Mar. 02, 2020
Summary: Case: 10-15527 Date Filed: 08/10/2012 Page: 1 of 49 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 10-15527 _ D.C. Docket No. 8:06-cr-00026-RAL-TBM-4 UNITED STATES OF AMERICA, llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee, versus WILLIAM ALLEN BROUGHTON, a.k.a. W. Allen Broughton, a.k.a. Allen Broughton, llllllllllllllllllllllllllllllllllllllll Defendant - Appellant. _ No. 10-15536 _ D.C. Docket No. 8:06-cr-00026-RAL-TBM-9 UNITED STATES OF AMERICA,
Summary: Case: 10-15527 Date Filed: 08/10/2012 Page: 1 of 49 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 10-15527 _ D.C. Docket No. 8:06-cr-00026-RAL-TBM-4 UNITED STATES OF AMERICA, llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee, versus WILLIAM ALLEN BROUGHTON, a.k.a. W. Allen Broughton, a.k.a. Allen Broughton, llllllllllllllllllllllllllllllllllllllll Defendant - Appellant. _ No. 10-15536 _ D.C. Docket No. 8:06-cr-00026-RAL-TBM-9 UNITED STATES OF AMERICA, ..
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Case: 10-15527 Date Filed: 08/10/2012 Page: 1 of 49
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 10-15527
________________________
D.C. Docket No. 8:06-cr-00026-RAL-TBM-4
UNITED STATES OF AMERICA,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee,
versus
WILLIAM ALLEN BROUGHTON,
a.k.a. W. Allen Broughton,
a.k.a. Allen Broughton,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellant.
________________________
No. 10-15536
________________________
D.C. Docket No. 8:06-cr-00026-RAL-TBM-9
UNITED STATES OF AMERICA,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee,
versus
Case: 10-15527 Date Filed: 08/10/2012 Page: 2 of 49
RICHARD WILLIAM PETERSON,
a.k.a. Richard Snyder,
a.k.a. Dick Snyder,
a.k.a. Bob James,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(August 10, 2012)
Before JORDAN, and FAY, Circuit Judges, and HOOD,* District Judge.
FAY, Circuit Judge:
This criminal case involves sophisticated financial structuring through the
interplay of related corporate subsidiaries in the context of the insurance
business. While such financial structuring is not inherently improper, here the
two Appellants, William Allen Broughton (“Broughton”) and Richard William
Peterson (“Peterson”), were convicted of conducting a modern-day financial
shell game in which they falsified financial statements, exchanged paper
ownership over non-extant fraudulent assets, and collected insurance premiums
*
Honorable Joseph M. Hood, United States District Judge for the Eastern District of
Kentucky, sitting by designation.
2
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and monthly payments from unwitting innocents.1 We now have before us
Appellants’ consolidated appeals.
Collectively, they state two bases for reversal: (1) Broughton contends that
the Government’s purported failure to file charges within the relevant statutes of
limitations demands reversal; and (2) both Appellants claim that the district court
erred in denying their motions for judgment of acquittal due to an insufficiency
of evidence. Finding no error, we affirm Appellants’ convictions.
I.
A Middle District of Florida grand jury returned the controlling indictment
on January 17, 2006. The 27-page indictment contained two counts against ten
defendants: Count I charged a conspiracy to commit (i) mail fraud, in violation
of 18 U.S.C. § 1341, (ii) wire fraud, in violation of 18 U.S.C. § 1343, and (iii)
insurance fraud, in violation of 18 U.S.C. § 1033(c)(1), all of which violated 18
U.S.C. § 371. Additionally, Count II charged a money-laundering conspiracy, in
violation of 18 U.S.C. § 1956(h). In sum, the entirety of the indictment charged
the defendants with engaging in a far-reaching conspiracy intended to benefit the
individual members from the fraudulent capitalization of purported insurance
1
Appellants, along with eight others, were indicted on these charges. Insomuch as those
other individuals are relevant, they will be discussed below.
3
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companies and related businesses.
The only pre-trial motions relevant to the appeal before us involved
motions to dismiss the indictment filed by Broughton and other defendants in
which they claimed the indictment was untimely. They argued that the relevant
statute of limitations had expired prior to January 17, 2006, because the district
court had improperly granted a motion to suspend the statute of limitations
pending the receipt of evidence located in foreign jurisdictions.2 The district
2
The Government had sought and received a suspension of the controlling statutes of
limitations in accordance with 18 U.S.C. § 3292, which permits, under certain circumstances, the
suspension of a statute of limitations pending an official request for evidence to a foreign country
where it reasonably appears that such evidence resides in the foreign country. 18 U.S.C.
§ 3292(a). Such a suspension may not endure beyond the time the foreign country takes final
action, or, in any event, more than three years from the filing of the official request. 18 U.S.C.
§ 3292(b).
The Government’s request was predicated on requests to two foreign countries: Costa
Rica, and Panama. The first series of requests was directed to Costa Rica, when the Government
sought the issuance by the district court of letters rogatory to Costa Rican judicial authorities.
The Government filed that request with the district court on January 3, 2003. Therein, the
Government identified evidence relevant to its criminal investigation of the financial fraud being
investigated, including the request for certain business records from corporations and individuals
implicated in the investigation. The district court granted that request four days later.
Subsequently, the Government moved on July 21, 2003, to suspend the statute of limitations
pending the outcome of those letters rogatory, pursuant to § 3292(a)(1). The district court granted
the requested suspension. Soon afterwards, on July 23, 2003, the Government made a similar
request to Panama, this time directly filing a request for information with Panamanian
authorities. The Government subsequently filed a second motion for issuance of letters rogatory
to Costa Rica on August 14, 2003, broadening the scope of its requested information. One year
later, the Government sought and was granted a suspension of the pertinent statute of limitations
pending the final outcome of their requests.
Neither Costa Rica nor Panama provided their final responses until 2005: Panama
provided its final response on April 28, 2005, and Costa Rica did the same nearly seven months
later on November 3, 2005.
4
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court denied those motions.
Trial began on April 13, 2010. At the close of the Government’s case,
Broughton and Peterson moved for a judgment of acquittal on both counts of the
indictment. The district court denied those motions, as well as the subsequent
renewed motions. The trial finished on May 18, 2010, when the jury returned
guilty verdicts as to Broughton and Peterson on both counts after 21 days of trial.
II.
As we must, we consider the factual background in the light most
favorable to the Government. See United States v. Glen-Archila, 677 F.2d 809,
818 (11th Cir. 1982). At trial, the Government provided evidence of the
following.
For a little over two years beginning in 1996, the Internal Revenue Service
conducted an undercover investigation into insurance fraud in the United States
and overseas. In particular, the investigation was directed at individuals and
corporations who marketed themselves as insurance providers on the basis of
rented assets.3 Such companies sought to collect insurance premiums while never
3
As testified to by witnesses like Lynn Szymoniak and Belinda Miller, federal and state
law requires that any company that wishes to provide insurance or credit backing on behalf of
other companies in the United States must be licensed. To be licensed, a company must
5
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intending to pay out on any meritorious claims. As will be discussed below, the
undercover agents learned of numerous companies, some of which were operated
by Appellants, that engaged in a conspiracy to operate in such a fashion.
However, the facts relevant to the appeal now before us extend beyond the
confines of the undercover investigation. Therefore, we divide our discussion of
the evidence at trial into two parts. First, we focus on the relationship between
Appellants and the other co-conspirators leading up to and subsequent to the
undercover investigation. Then, we turn to the fruits of the undercover operation
itself.
A.
At the center of the conspiracy to bilk innocent investors and would-be
insureds were three people: Michael Ernest Zapetis, Sr. (“Zapetis”); his wife,
Karen Carazo Zapetis (“Carazo”); and an individual named Richard Joseph
Solomon (“Solomon”). In fact, Appellants’ own actions and those of their four
other indicted co-conspirators emanated like ripples in a pond from the fraud of
demonstrate that it has sufficient capital to meet its insurees’ obligations and that it possesses
sufficient capital reserves in the event of future claims. The types of capital that can legally be
claimed by such insurance companies includes Treasury notes, certificates of deposit (“CDs”),
stocks, and bonds. However, such capital can only be claimed as an asset on financial statements
if it is owned and controlled by the claiming company. The IRS investigation sought to locate
companies or people that purported to “rent” assets that they themselves may or may not have
owned to others for inclusion on their own balance sheets as assets. This, of course, does not
meet the requirements of the law.
6
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Zapetis, Carazo, and Solomon.4 We therefore begin our discussion with them.
Whether through purposeful direction or fortuitous criminality, the genesis
of the fraud at issue was rooted in the overseas creation of fraudulent assets.
Solomon, a self-employed business consultant, traveled to Panama in the early
1990s. There, he met with individuals operating a Panamanian cooperative
acting as a credit union, Cooperative de Ahorro y Credito Gatun (“Gatun”).
Solomon became a member of Gatun by depositing a small sum of money.
Subsequently, he and those individuals, purportedly operating in an International
Trust Division of Gatun, caused Gatun to issue hundreds of millions of dollars in
CDs allegedly secured by billions of dollars of gold doré,5 even though Solomon
never confirmed the existence of that gold doré. No such gold doré in fact
demonstrably existed. Even if it had existed, under Panama law issuance of such
CDs would have still been illegal.
Soon after, Gatun was ordered in 1994 by the overseeing Panamanian
agency to cease and desist issuing such CDs. Gatun, at Solomon’s urging, did
4
The evidence is unclear as to when Zapetis, Carazo, and Solomon met or began to plan
their conspiracy. However, what is clear upon review of the evidence are the steps taken by each
of those individuals in furtherance of that conspiracy. It is those steps which we now trace.
5
Gold doré is a mélange in which low-grade rock and gold are poured into bars, which
must contain at least 50% gold to qualify as gold doré. The gold doré is then used to create gold
bullion or coins. It is also a well-know vehicle for fraud, as its form often defies accurate
valuation.
7
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not cease issuing fraudulent CDs. Ultimately, on or about February 23, 1996, the
overseeing agency intervened in Gatun’s business and took control of its
operations, referring the many inquiries into the CDs that had been issued by
Gatun to the relevant police and governmental authorities. Eventually, on June
22, 1997, the overseeing agency liquidated Gatun.
Meanwhile, the next step in the parties’ business dealings involved the
creation of companies to claim those fraudulent assets on their own balance
sheets. Longtime residents of Miami, Zapetis and Carazo began acquiring off-
shore companies in the early 1990s, naming those companies in a manner to
suggest that they were involved in the insurance business. For example, Zapetis
and Carazo formed and operated companies under names like American
Indemnity Company, Ltd. (“American Indemnity”), Star Insurance Company
(“Star Insurance”), and Global Insurance Company (“Global Insurance”), which
were incorporated in St. Christopher and Nevis in the West Indies. They also
formed certain Costa Rican subsidiary companies, like Capitales Uno de
America, S.A. (“Cap Uno”).6 To manage those companies, Zapetis and Carazo
had another offshore company, Consorcio de Seguros Polaris, S.A.
6
Other similar companies formed by Zapetis and Carazo included Capitales Tres de
America, S.A. (“Cap Tres”), Capitales Seis de America, S.A. (“Cap Seis”), and Capitales Nueve
de America, S.A. (“Cap Nueve”).
8
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(“Consorcio”), which provided administrative services to the various companies
in which Zapetis and Carazo had an interest. Additionally, Zapetis and Carazo
owned and operated a company in Miami, Florida, which was known as First
International Finance Corporation (“First International”), for which Zapetis and
Carazo claimed to work as consultants.
To make it appear that their companies were capitalized, Zapetis and
Carazo rented the Gatun CDs from Solomon. They paid Solomon rental fees for
the use of the purported Gatun CDs, which they then listed on their own
companies’ financial statements, claiming ownership when in fact no such
ownership existed. To conceal their fraud, Zapetis and Carazo obtained an
audited financial statement of at least one company, American Indemnity, on the
strength of the Gatun CDs. Even though that original audit opinion, dated
December 15, 1995, was later withdrawn in May 1996 when the auditor learned
that the Gatun CDs may have been in fact illiquid or nonexistent, Zapetis and
Carazo nonetheless continued to market American Indemnity. Indeed, it was on
this foundation of fraudulent capitalization that Zapetis and Carazo marketed
their own companies to others for sale.
Zapetis and Carazo began selling some of those companies, as well as
renting out the very same assets–the Gatun CDs–that they had rented from
9
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Solomon.7 For instance, Zapetis and Carazo sold interests in American Indemnity
and its other companies, representing that they were subsidiaries of legitimate
insurance companies with assets that could be rented for purposes of
capitalization. In exchange for such sales and rentals, Zapetis and Carazo
received preferred stock from the purchasing insurance companies, as well as a
monthly rental payment greater than that which they paid to Solomon for the
same purported assets, which they characterized as a “dividend.” In the event one
of the purchasing companies failed to make its monthly rental payment, the
purchaser was stripped of its ownership of the alleged subsidiary as well as its
ostensible ability to claim the Gatun CDs as assets on its own consolidated
financial statements.
Appellant Peterson was one such purchaser of a fraudulent insurance
subsidiary. He owned a cooperative known as the California Restaurant
Specialty Cooperative (“CRSC”), located in San Francisco, California.8 In the
late fall of 1996 or early 1997, Peterson hired a man named James Stanley
Connally —who later pled guilty to tax evasion and conspiring to commit wire,
7
To turn a profit on those rentals, they would charge a higher rental rate than Solomon
had originally charged them.
8
In fact, other individuals were listed as nominal owners of CRSC to assist Peterson in
obfuscating his own ownership. This was done because of Peterson’s outstanding debts and
financial difficulties.
10
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mail, and insurance fraud, and testified for the Government at trial—to be the
nominal head of CRSC.9 In that capacity, Connally began marketing CRSC to
agents in California, offering to sell to its members insurance products that
would be provided by a third-party insurance company.
Soon afterwards, Peterson decided to purchase an insurance company that
CRSC could itself own and operate. Connally, who had met Zapetis and Carazo
previously,10 believed that Zapetis and Carazo could provide a suitable offshore
company for Peterson. When Connally contacted them, Zapetis and Carazo were
indeed interested in selling such a company. On April 25, 1997, they provided
Connally with an offer to sell Peterson Star Insurance for $225,000. Star
Insurance purported to be a licensed insurance carrier in St. Kitts. Separate from
the purchase price of $225,000 was also a $10,000 charge for an audit, which
was to be conducted by “either Price, Waterhouse or Pannell, Kerr, & Forester in
Antigua.” Supporting the valuation of Star Insurance were its internal financial
9
Peterson was put in touch with Connally through his attorney, John Heinemann.
Explaining to Connally that he could not himself be president of CRSC because of his impending
bankruptcy and previous difficulties with California insurance regulators, Peterson asked
Connally to serve as the head of the insurance cooperative, to conceal Peterson’s own
involvement.
10
Indeed, Connally had worked closely with Zapetis and Carazo to get a company
approved to issue insurance through Lloyds of London, notwithstanding concerns over the
company’s capitalization. Once approved by Lloyds, that company underwrote some insurance
contracts, although it refused to honor subsequent claims.
11
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statements, audited by an individual CPA, that certified that Star Insurance’s
assets included $30 million in Gatun CDs owned by one of Star Insurance’s
subsidiaries, Cap Tres. There was no discussion of how a company with $30
million in assets could be sold for $225,000. Nonetheless, Peterson was not
comfortable paying $225,000.
After some negotiations involving Peterson, Connally, Zapetis, and
Carazo, Peterson purchased on May 2, 1997, a 45-day option on Star Insurance
and Cap Tres for $10,000, as well as an audit of the same for an additional
$10,000. Because Peterson wanted his role to be private, though, it was Connally
rather than Peterson that signed the agreement with Zapetis and Carazo. To pay
for the purchase, Peterson gave Connally a briefcase full of approximately
$95,000 in cash so that there would be no paper trail leading back to Peterson.
As to the remaining proceeds that were not used for the purchase of Star
Insurance, some were used for Connally’s salary, some for the marketing
expenses of CRSC and Star Insurance, and some were to be deposited, on
Peterson’s instructions, in an CRSC account held at Charles Schwaab in $2,500
increments, so as not to “arouse any suspicion.” Additionally, Connally flew to
the Cayman Islands to secret approximately $10,000 of the cash for Peterson in a
bedroom mattress located in a condo owned by Peterson. When doing as he was
12
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instructed, Connally saw that “there was a lot of [other] cash under the mattress.”
Meanwhile, Zapetis and his employees were seeking to purvey an audit of
Star Insurance. After months of delay, the company that was to provide the audit,
Peat Marwick, found that it could not verify the assets claimed by Star Insurance
or Cap Tres. Indeed, as a result of their inability to verify those assets, Peat
Marwick never provided an audit of Star Insurance.
Nonetheless, Peterson and Connally were not deterred in marketing Star
Insurance as an insurance provider, notwithstanding that both Peterson and
Connally knew Star Insurance possessed no assets, as it was required to do when
participating in the insurance business. Instead, they marketed Star Insurance on
the basis of the financial statement originally provided by Zapetis and Carazo,
successfully marketing Star Insurance to a London insurance broker. Moreover,
Star Insurance succeeded in underwriting reinsurance for such business concerns
as marine insurance in Turkey and aviation concerns operating from Europe to
North Africa. In fact, Peterson, using the alias “R. Snyder,” corresponded
concerning, approved, and signed many of the policies underwritten by Star
Insurance. He used an alias because “he didn’t want to show the Richard
Peterson name anywhere based on his history.”
Meanwhile, Appellant Broughton also had ties to Zapetis and Carazo’s
13
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fraudulent corporations. Broughton had known Zapetis since around 1982.
Zapetis assisted Broughton in starting his own companies and obtaining assets.
These companies included the Hanover-Packard Group, which owned Synergy
Capital Management (“Synergy Capital”), which in turn owned Financial Capital
Company of America (“Financial Capital”).11 Carazo, among other people,
served on the board of Synergy Capital with Broughton. Broughton also
recruited another man, Ralph Plummer–who later pled guilty to conspiracy to
commit fraud and testified for the Government at trial—to serve as the nominal
president of Synergy Capital. Zapetis also introduced Connally, the same man
who had served as the figurehead president of Peterson’s insurance co-op, Star
Insurance, to Broughton.12 Connally worked for Broughton and Financial Capital
for approximately four months, soliciting business for Financial Capital and
Synergy Capital.
Financial Capital purported to operate by guaranteeing that clients it
represented would repay loans, return capital, and pay interest due to investors
11
Synergy Capital was a registered Delaware limited liability company operating out of
Jackson, Mississippi, and Atlanta, Georgia. Financial Capital was a registered Nevada limited
liability company and operated out of Atlanta, Georgia. Neither was licensed to perform
insurance business in the United States or anywhere else.
12
This introduction ultimately resulted in Connally leaving Peterson and Star Insurance to
work with Broughton, Financial Capital, and Financial Capital’s parent company, Synergy
Capital.
14
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and lenders. To satisfy those guarantees, Broughton claimed to have pooled
together the resources of certain insurance companies, which he said stood ready
to be called upon in the event of need. Some of those companies were owned and
operated by Zapetis and Carazo. One such purported insurance company owned
by Zapetis and Carazo was Cap Diez, which guaranteed it would accept a
proportionate amount of Financial Capital’s guaranteed liability in exchange for
fees. In total, Broughton claimed that there were more than 35 other companies
that guaranteed Financial Capital’s debt obligations, all of which he marketed as
possessing more than $5 million in capital. However, in correspondence with
other associates, Broughton acknowledged that some of the companies
participating in Financial Capital’s debt obligations, particularly some of the
ones provided by Zapetis and Carazo, in fact lacked sufficient assets and
required assets to “be placed in them to qualify.”
Nonetheless, Broughton and Synergy Capital entered into agreements with
corporations to “support credit enhancement opportunities.” Among other
transactions between Broughton, Zapetis, and Carazo, in or around June 1997,
Synergy Capital entered into an agreement with one of Zapetis and Carazo’s
Costa Rican companies, Inversiones Solidaris Americanis (“Inversiones”). Under
that agreement, Inversiones provided Synergy Capital’s subsidiary, Financial
15
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Capital, with $250 million in financial guarantees in exchange for 24% interest
in Synergy. The $250 million in financial guarantees derived from a CD issued
by a purported Mexican financial institution, Factor Mex, which in turn was held
by a Costa Rican bank. Those assets were never verified, in fact, to have existed.
Nonetheless, Broughton testified that he personally believed those assets were
genuine.
Similarly, Synergy Capital entered into an agreement with Eagle
Telephony and Telecommunications (“ET&T”) on or about December 9, 1997,
in which ET&T agreed to assign $100 million in Treasury notes to Financial
Capital, in exchange for 20% of all fees and profits of Financial Capital. ET&T
was to lodge an assignment of the Treasury notes and other “documentation” in a
bank outside of the United States. Under the terms of the agreement, the $100
million in Treasury notes was simply to be shown on Financial Capital’s balance
sheets without being “directly hypothecated.” To accomplish the transfer of the
$100 million in Treasury notes, ET&T’s owner signed an “Irrevocable Stock or
Bond Power” and a United States Treasury Form PD 1832, both of which
purportedly assigned the Treasury notes to Financial Capital. However, in truth,
the executed assignment and treasury forms were fraudulent, made to resemble a
16
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real sale of a real Treasury note.13
Notwithstanding such deficiencies, Broughton obtained an unqualified
audit opinion of Financial Capital’s financial statements. The audit was
performed by one of the co-defendants in this action, a certified public
accountant named William Clancy. Clancy, in completing his audit, included the
$250 million Factor Mex CD and the purported $100 million in Treasury notes
from ET&T as assets on Financial Capital’s financial statements. Broughton
subsequently marketed Financial Capital and Synergy Capital, in part, on the
basis of Clancy’s fraudulent audit.
In fact, Broughton marketed both Financial Capital and Synergy Capital as
being uniquely situated to assist businesses with “credit enhancement,” claiming
that Financial Capital and Synergy Capital would assist those companies by
providing financial guarantees and “creative structur[es]” for their commercial
ventures. Synergy Capital’s sales brochure, for instance, trumpeted that Financial
Capital had over $350 million in capital and that it was partnered with
participating businesses that possessed over $1.4 billion in assets. Likewise, the
13
As shown by the Government at trial, ET&T was never listed as owning the Treasury
notes it purported to assign to Financial Capital and, regardless, Form 1832 was improper for
transfer, since such a form was only applicable to owners of pre-1986 notes that sought to have
their own debt instruments re-registered with the Government.
17
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brochure detailed “a program of participation agreements/treaties with various
cooperating companies under which they agree to share, on a pro-rata basis, the
guarantee amount at risk.” In particular, Financial Capital claimed that its own
guarantees were insured by a Swiss insurance company, Roelofs Insurance
Management, which was reinsured by Munich Re as well as by “a pool of
reinsurers all rated by Standard & Poor’s as A to AAA.” None of these claims
were, in fact, true.
Nonetheless, through at least March 2001, Zapetis, Carazo, and the other
conspirators continued to market those guarantees for their own economic
benefit. In one such instance, they guaranteed the actions of a company
controlled by two individuals, Daniel DelPiano and Daniel Stetson, Premier
Holidays International, Inc. (“Premier”). Premier claimed to be in the vacation
time-share business and solicited investor loans. Utilizing the fraudulent
guarantees provided by Financial Capital and Synergy Capital in December
1997, as well as others, Premier promised high rates of return in order to obtain
private investment. In reliance on such guarantees and promises, investors
invested money with Premier. For instance, one family invested $200,000;
another $218,000; another $500,000; and another $1.5 million. Within each set
of loan documents provided to its investors, Premier included a “Certificate of
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Tender on Contingent Obligation,” which was signed by Broughton or another
representative of Financial Capital. In the Certificate of Tender, Financial
Capital claimed that it “and its Participating Companies, re-insured with its
group of Reinsurers: Scandia Re, Zurich Re, General Re, Munich RR, [and]
AIG” guaranteed to repay any of Premier’s debt in the event of default by
Premier.14
Premier was, in fact, a Ponzi scheme. Eventually, in or around September
2000, Premier ceased interest payments to its investors, who subsequently sought
to collect on Financial Capital’s guarantees. As required by the loan documents
that they had received from Premier and in reliance on the Certificate of Tender
provided by Financial Capital, Premier’s investors sent claims to Financial
Capital and Synergy Capital. In response, from August 2000 through March
2001, Synergy Capital and Broughton sent those investors letters informing them
that Financial Capital was working towards a resolution. For example, in a letter
dated October 23, 2000, Broughton informed the Premier investors that Financial
Capital—and Synergy Capital as the parent company of Financial
14
Broughton paid Zapetis and Carazo’s companies for their guarantees. On February 13,
1998, for instance, Broughton sent a check for $5,000 to one Zapetis/Carazo company. The same
day Broughton deposited checks of $6,000 and $3,000 into Synergy Capital’s own bank account,
with both checks described as deriving from fee income related to Premier.
19
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Capital—“accept[s] responsibility” for the obligations of Premier, and that
Synergy Capital has agreed to “accept the responsibility to work out” those
obligations. Several other similar letters were sent out to Premier’s investors,
informing them of the purported steps being taken by Synergy Capital. The final
letter sent out to Premier’s investors by Synergy Capital and signed by
Broughton on March 13, 2001, stated that Synergy Capital was “very near
finalizing the funding that will allow us to move forward in clearing the debt of
[Premier] in a timely manner” and “anticipate[d] being in a position by the end of
this month to begin those payments.” No such payments were made.
B.
As noted above, the IRS began undercover operations late in 1996, with
several undercover agents posing as owners of an offshore insurance company
known as Continental Indemnity, Ltd., which they wanted to capitalize with
rented assets. The IRS’s investigation resulted in recorded conversations and
meetings with both Appellants, as well as with many of Appellants’ co-
conspirators like Connally, Zapetis, and Carazo. The undercover agents’ point of
entry into the conspiracy was Connally.
Soon before Connally began working with Financial Capital in early 1998,
he was telephoned by a man referred to him by a Lloyds of London contact. The
20
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man, identified as Mr. Tony Hicks, lived in Memphis, Tennessee. Hicks told
Connally that there was a group of businessmen that were “wanting to start or
find some assets.” That group of businessmen was led by Barry Scoville, who
told Connally that “he wanted to get some assets for his start up [insurance]
company.” Scoville told Connally that the company would be domiciled in
Barbados. Over the course of approximately ten communications, Connally
introduced Scoville to Zapetis, who he believed could provide the types of rental
assets Scoville sought.
Soon afterwards, when Connally began working with Broughton and
Financial Capital, Connally introduced Scoville to Broughton at the offices of
Synergy Capital in Atlanta. On behalf of Broughton and his companies, Connally
shared with the IRS agents Synergy Capital’s marketing information, which
included Clancy’s unqualified audit opinion for Financial Capital. Connally told
Scoville and one of Scoville’s associates, identified as Mr. Scott Manning, that
Broughton could provide different types of rented assets through his companies,
Synergy Capital and Financial Capital. Particularly, he told them that both
companies could provide both CDs and treasury notes as rented assets but that
Treasury notes would cost more because they were more “credible.” Also,
Broughton explained the way in which transactions for rented assets could be
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structured, having a subsidiary of an insurance company hold assets while
having the insurance company issue preferred stock with a mandatory dividend
payment. Under such a scheme, the asset’s lender could reclaim those assets in
the event of nonpayment of a dividend. Broughton admitted that he structured
his own businesses in a similar fashion. Little did any of the conspirators know
that Scoville and Manning were IRS undercover agents.
During recorded conversations between the undercover agents, Zapetis,
Carazo, and an attorney named John E.S. Kramar (“Kramar”), who had been
recommended to the agents by Connally, offered certain assets for rent from the
Zapetis/Carazo companies. They offered to sell Cap Seis to the undercover
agents, as well as to rent $10 million in assets with which it could be capitalized.
They also proposed the way in which such a transaction could be completed with
Continental Indemnity. Eventually, notwithstanding the urging of Kramar,
Connally, and Clancy that there was a more effective way to conceal that the
proposed assets were rented than that proposed by Zapetis and Carazo,15 the
undercover agents entered into contracts with Zapetis and Carazo for Continental
Indemnity to rent the assets of some of his companies. By the terms of those
15
For instance, they pointed to the way in which the financial statements of Synergy
Capital and Star Insurance were structured, as well as the type of agreement entered into by
Synergy Capital and ET&T.
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contracts, the rented assets were “not to be hypothecated, loaned against, or used
for any other purpose than as capital contribution to” Continental Indemnity.
Both Connally and Kramar received $10,000 from Scoville for introducing him
to Zapetis and Carazo.
During the course of their communications with the undercover agents,
Zapetis and others discussed Appellants’ own involvement with similar financial
transactions. For instance, during one recorded telephone conversation, Zapetis
told the undercover agents all about his relationship with Broughton. Claiming
that they had done many deals together, where Broughton would lose money but
would simply construct another deal, Zapetis described the way in which
Broughton would structure his businesses, “get[ting] this huge overhead []
[where] he builds these pyramids and doesn’t put the cement blocks in the right
place all the time and the whole thing starts crumbling.” Zapetis also informed
an IRS undercover agent in early 1999 that Broughton was at it again, this time
providing financial guarantees to builders.
In a similar vein and at a later time, Connally referred the undercover
agents to “Richard Snyder,” the alias being used by Peterson, for administration
of Continental Indemnity. Connally told the agents that Peterson would keep all
their business dealings confidential in exchange for a monthly fee for his
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services. In fact, when agents contacted Peterson as per Connally’s suggestion,
Peterson was more than willing to help.16 The agents explained to him that
Continental Indemnity had more than $10 million in rented assets, costing them
more than $40,000 each month in rent, and that they needed someone else to
manage the administration of Continental’s records. Peterson said that he had
dealt with such record-keeping in the past with such companies as Star Insurance
and that he would keep an eye out for problems that could be avoided by
“cancel[ing]” those rented assets.
III.
Now, we have before us two bases for reversal. First, Appellant
Broughton, in an argument in which Appellant Peterson does not join, contends
that the January 17, 2006 indictment is barred by the applicable statute of
limitations and that the district court erred in denying his motion to dismiss on
that basis. Specifically, Broughton argues 1) that the statute of limitations was
improperly suspended under 18 U.S.C § 3292; and 2) that because a five-year
statute of limitations applies to both counts of the indictment, any alleged
conspiracy was completed long before the return of the January 17, 2006
16
During his communications with the officers, Peterson referred to himself only as
“Richard Snyder.” In fact, it was not until agents attempted to serve a grand jury subpoena on
him that he admitted to being Richard Peterson.
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indictment. Like the district court before us,17 we find no merit in Broughton’s
first contention. Nor do we discern any more merit in Broughton’s second
contention, which is mooted by our finding that the indictment was filed within
five years of the ongoing conspiracy.
“Denials of motions to dismiss the indictment are reviewed for abuse of
discretion, but underlying legal errors . . . are reviewed de novo.” United States
v. Robison, 505 F.3d 1208, 1225 n.24 (11th Cir. 2007) (citations omitted).
A.
As a threshold matter, we first address whether the district court properly
suspended the running of the statute of limitations. We have previously noted
that “[w]here there is a question of statutory interpretation, ‘we begin by
examining the text of the statute to determine whether its meaning is clear.’”
United States v. Trainor, 376 F.3d 1325, 1330 (11th Cir. 2004) (quoting Harry v.
Marchant,
291 F.3d 767, 770 (11th Cir.2002) (en banc)). “Indeed, ‘[i]n
construing a statute we must begin, and often should end as well, with the
language of the statute itself.’”
Id. (quoting United States v. Steele,
147 F.3d
17
The district court held that the statute of limitations was properly suspended pending
the final responses of Costa Rica and Panama; that a ten-year statute of limitations applied to
insurance fraud as charged in Count I; and that, even if the limitation period was five years, the
indictment was nonetheless timely filed.
25
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1316, 1318 (11th Cir. 1998) (en banc)).
18 U.S.C. § 3292 provides that:
Upon application of the United States, filed before return of an
indictment, indicating that evidence of an offense is in a foreign
country, the district court before which a grand jury is impaneled to
investigate the offense shall suspend the running of the statute of
limitations for the offense if the court finds by a preponderance of
the evidence that an official request has been made for such
evidence and that it reasonably appears, or reasonably appeared at
the time the request was made, that such evidence is, or was, in such
foreign country.
Id. at § 3292(a). A plain reading of § 3292 demonstrates that a district court’s
decision to suspend the running of a statute of limitations is limited to two
considerations: 1) whether an official request was made; and 2) whether that
official request was made for evidence that reasonably appears to be in the
country to which the request was made.
Id. If both those considerations are met,
the statute of limitations “shall” be suspended.
Id. Therefore, the issue before us
is whether those conditions were satisfied.
Broughton contends that the Government did not satisfy these
requirements, since
(1) the commission and completion of both alleged conspiracies
were fully known to the Government before it made the application
to the trial court pursuant to 18 U.S.C. § 3292,
(2) both conspiracies had terminated, or the final acts in furtherance
of the conspiracy had occurred, prior to the Government’s
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application to the trial court, and
(3) none of the evidence requested or obtained by the Government
from any foreign country as included in the Government’s
application was necessary and sufficient or relevant.
App. Broughton Br. at 19-20.
We find no support, either in our case law or in the facts of the case, for
any of Broughton’s stated contentions. Our case law demonstrates that § 3292 is
a procedural mechanism that may be used by the government under certain
circumstances and that a district court’s inquiry is constrained by the boundaries
of the two elements required by § 3292. One of our cases, Trainor, evinces this
principle.
In Trainor, the government had sent an official request to the Ministry of
Justice in Switzerland, requesting certain information related to an ongoing SEC
investigation into the defendant’s actions. Trainor, 376 F.3d at 1328. Six months
later, the government filed a motion in the district court to suspend the pertinent
statute of limitations pending Switzerland’s final action.
Id. at 1329. The
government filed with its motion no evidentiary support that could demonstrate
that “it reasonably appears, or reasonably appeared at the time the request was
made, that such evidence is, or was, in such foreign country.” § 3292(a).
Nonetheless, the district court granted the suspension.
Trainor, 376 F.3d at 1329.
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When the indictment was returned nearly one year after the government’s official
request to Switzerland, the criminal case was subsequently assigned to a
different judge. Id. The defendant again moved to dismiss the indictment as
untimely because the government had not satisfied § 3292(a) in requesting the
suspension of the statute of limitations.
Id. at 1329. This time, the district court
agreed with the defendant, finding that “the [g]overnment did not present the
district court with any evidence to satisfy the preponderance of the evidence
standard set out in 18 U.S.C. § 3292.”
Id. The government appealed, arguing that
its unsworn application to the district court, “accompanied by only a copy of an
evidentiary request sent to a foreign government, satisfies § 3292's requirement
that the [g]overnment demonstrate, by a preponderance of the evidence, that
evidence concerning the charged offense reasonably appears to be located in the
foreign country.”
Id. at 1327.
We disagreed, holding that a motion to suspend a statute of limitations
must be accompanied by “something with evidentiary value–that is, testimony,
documents, proffers, and other submissions bearing some indicia of
reliability–tending to prove that it is reasonably likely that evidence of the
charged offense is in a foreign country.” Id. at 1332. In that case, the government
had failed to provide anything “of evidentiary value for the district court to
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evaluate.” Id. at 1333 (citing DeGeorge v. United States Dist. Ct. for the S. Dist.
Of Cal.,
219 F.3d 930, 937 (9th Cir. 2000)).
Implicit in our holding in Trainor was our realization that the district court
must assess and weigh both the evidence sought in the foreign jurisdiction and
the information proffered by the government in pursuit of that foreign evidence.
See id. at 1331-32. The district court makes this determination as part of its
consideration of whether the government has met the requirements of § 3292(a)
in seeking a suspension. Otherwise, there would be no need for the government
to provide any evidence at all in support of its application for suspension of a
statute of limitations under § 3292(a). Here, it is clear that both prongs were
satisfied by the Government’s request.
First, as to the requirement that “an official request has been made for such
evidence,” §3292(a), there can be no doubt that the Government’s requests here
comply. As defined by § 3292, a request qualifies as an “official request” if it is
“a letter rogatory, a request under a treaty or convention, or any other request for
evidence made by a court of the United States or an authority of the United
States having criminal law enforcement responsibility, to a court or other
authority of a foreign country.” § 3292(d). The Government’s requests to both
Costa Rica and Panama qualify under this standard. As was noted above, supra,
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the Government’s first request was filed with the district court as a motion for
issuance of letters rogatory to Costa Rica on January 3, 2003, and asked that
proper Costa Rican authorities search the offices of American Indemnity and
Star Insurance, and turn over the bank records for such companies as American
Indemnity and others associated with Broughton, Peterson, and Zapetis.
Similarly, the Government submitted a request to Panama on July 23, 2003,
requesting information regarding Co-op Gatun. Both the letters rogatory to Costa
Rica and the request to Panama for evidence necessarily qualify as “official
requests” under § 3292(d).
Moreover, the district court also properly found that the second
requirement of § 3292 was satisfied because it “reasonably appears, or
reasonably appeared at the time the request was made, that such evidence is, or
was, in such foreign country.” § 3292(a). The Government’s initial request to
Costa Rica—which, being the first such request is the only one relevant to
whether the statute of limitations was properly suspended—was made on the
basis of a sworn declaration by an Assistant United States Attorney, declaring
the extent of the investigation into the fraudulent activities at issue and affirming
the need for the discovery of certain information in Costa Rica. This declaration
satisfies our explicit requirement under Trainor. See Trainor, 376 F.3d at 1335.
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It also satisfies the implicit requirement of relevance and reasonableness
incorporated within § 3292. The Government’s initial request to Costa Rica was
found in the contemporaneously filed 22-page proposed “International Letter
Rogatory,” in which the Government noted the extent of the criminal conspiracy
and the necessity of certain information found only in Costa Rica. Review of that
International Letter Rogatory demonstrates the narrowly tailored evidence
sought by the Government, the relevance of that evidence to an ongoing criminal
investigation, and the propriety of the request itself.
Simply put, Broughton’s perceived shortcomings regarding the suspension
of the statute of limitations here are not only nowhere to be found in § 3292(a),
but also contrary to the idea of prosecutorial discretion. It is neither here nor
there that the Government knew of the conspiracy before sending its official
requests to Costa Rica and Panama; that the conspiracy had terminated before the
Government requested the statute of limitations be tolled; or that “none of the
evidence requested or obtained by the Government” was needed at trial. Accord
United States v. Lyttle, 667 F.3d 220, 225 (2d Cir. 2012) (“Section 3292 does
not demand that the foreign evidence sought be pivotal to the indictment; rather,
it need only be ‘evidence of an offense.’ Grand juries are not required to vote on
indictments as soon as they have probable cause: ‘A grand jury investigation is
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not fully carried out until every available clue has been run down and all
witnesses examined in every proper way to find if a crime has been committed.’
Section 3292 does not alter this long-standing precept, but rather facilitates it by
providing a means to suspend the statute of limitations while evidence is sought
from abroad.”) (internal citations omitted)). Surely each of those considerations,
like other pre-trial concerns, is entrusted to the prosecutor’s discretion and the
district court’s oversight.
Accordingly, having found that both factors of § 3292(a) were satisfied,
we find that the district court properly granted the suspension of the relevant
statute of limitations.
B.
We now turn to whether, even with that suspension of the statute of
limitations, the action filed against Broughton was timely. He urges us to find
that a five-year statute of limitations, rather than a ten-year statute of limitations
as argued by the Government, controlled the relevant criminal actions, and that
any conspiracy had reached fruition in 1999, meaning that the January 17, 2006,
indictment was necessarily untimely if applying a five-year limitations period.
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We need not address the duration of the controlling statute of limitations,18 since
we find that the conspiracy at issue continued through March 2001 and therefore
the January 17, 2006 indictment was filed before the expiration of even the five-
year statute of limitations.
Although Broughton contends that his criminal conduct was “largely
completed” as of February 24, 1999, when the Government seized his records, a
plain reading of the placatory language employed by Broughton in letters to
Premier’s investors demonstrates otherwise. As the district court initially
concluded, Broughton’s letters under Synergy Capital’s letterhead were
intended to assuage the concerns of victim-investors by persuading
them that Synergy was expending every effort to compensate the
victim-investors for their losses, encourage the victim-investors to
contact Synergy, and exercise continued patience with Synergy – in
other words, lull them into a false sense of security and discourage
them from contacting law enforcement or other authorities.
Order, Mar. 11, 2010, ECF No. 504 at 5. He wrote and signed those letters as the
Managing Director of Synergy Capital, the parent company of Financial Capital,
and it is reasonable that the jury would have found those letters to be a
continuing execution of a conspiracy to defraud. Accord United States v. Evans,
18
The district court found the applicable limitations period was ten years because of the
ten-year limitation period for insurance fraud under 18 U.S.C. § 3293, while Broughton argued
instead that the charge was controlled by the five-year periods for conspiracy to commit mail
fraud, wire fraud, and money laundering under 18 U.S.C. § 3282.
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473 F.3d 1115, 1121 (11th Cir. 2006) (finding lulling doctrine applicable where
letter sent after fruits of fraud received by defendant constituted continuation of
original scheme to defraud); see also United States v. Georgalis,
631 F.2d 1199,
1204 (5th Cir. 1980) (“[P]recedent is clear that letters designed to conceal a
fraud, by lulling a victim into inaction, constitute a continuation of the original
scheme to defraud.”).19 This would mean that the conspiracy did not reach
fruition until March 13, 2001, when he sent his final letter.
Regardless, even if Broughton was correct and the conspiracy could have
been said to have ended when the Government seized his records on February
24, 1999, the Government would have had at least five years from that time to
bring its charges. Therefore, any charges would have been needed to be brought
before February 24, 2004. However, as noted above, supra, the statute of
limitations was suspended from the time of the first official request under § 3292
on January 3, 2003, at which point approximately 13 months would have
remained of the five-year statute of limitations period. § 3292(b) (“[A] period of
suspension under this section shall begin on the date on which the official
request is made and end on the date on which the foreign court or authority takes
19
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), the Eleventh
Circuit adopted all Fifth Circuit case law decided prior to October 1, 1981.
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final action on the request.”). It was suspended through November 3, 2005, with
the final action of Panama. Id. Therefore, the Government had approximately 13
months from November 3, 2005, to bring its charges. It filed the indictment a
mere two-and-a-half months later on January 17, 2006.
On the evidence before us, we therefore see no reason to disturb the
district court’s ruling. No matter how you cut it, the January 17, 2006 indictment
was timely under a correct application of § 3292.
IV.
We now turn to the error alleged by both Appellants. They contend that
the district court erred in denying their respective motions for acquittal as to both
counts of the indictment because of insufficient evidence to support the charges.
We review de novo the denial of a motion for judgment of acquittal, and in
reviewing the sufficiency of the evidence underlying a conviction, we consider
the evidence “in the light most favorable to the government, with all inferences
and credibility choices drawn in the government's favor.” United States v.
DuBose, 598 F.3d 726, 729 (11th Cir. 2010) (quoting United States v. LeCroy,
441 F.3d 914, 924 (11th Cir. 2006)). Therefore, our review for sufficiency of the
evidence inquires only whether a reasonable trier of fact could find that the
evidence established guilt beyond a reasonable doubt. United States v. Godinez,
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922 F.2d 752, 755 (11th Cir. 1991). “The question is whether reasonable minds
could have found guilt beyond a reasonable doubt, not whether reasonable minds
must have found guilt beyond a reasonable doubt.” United States v. Bacon,
598
F.3d 772, 775 (11th Cir. 2010) (quoting United States v. Ellisor,
522 F.3d 1255,
1271 (11th Cir. 2008)) (emphasis in original omitted). Accordingly,
[i]t is not necessary for the evidence to exclude every reasonable
hypothesis of innocence or be wholly inconsistent with every
conclusion except that of guilt . . . . The jury is free to choose
between or among the reasonable conclusions to be drawn from the
evidence presented at trial, and the court must accept all reasonable
inferences and credibility determinations made by the jury.
United States v. Garcia, 447 F.3d 1327, 1334 (11th Cir. 2006) (internal
quotations and citations omitted). We are “bound by the jury’s credibility
choices, and by its rejection of the inferences raised by the defendant.” United
States v. Peters,
403 F.3d 1263, 1268 (11th Cir. 2005) (citing United States v.
Glinton,
154 F.3d 1245, 1258 (11th Cir. 1998)). In accordance with these
collective limitations and upon review of the record, there is no doubt that
sufficient evidence supported the jury’s findings as to both Appellants. As such,
the district court properly denied their motions for acquittal.
A.
Count I of the indictment charges Appellants with conspiracy to commit
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mail fraud, wire fraud, and insurance fraud. There are three elements for proof of
such a conspiracy: (1) agreement between two or more persons to achieve an
unlawful objective; (2) knowing and voluntary participation in that agreement by
the defendant; and (3) an overt act in furtherance of the agreement. United States
v. Adkinson, 158 F.3d 1147, 1153 (11th Cir. 1998). As we noted in United States
v. Hasson,
333 F.3d 1264, 1270 (11th Cir. 2003) (citing United States v. Ross,
131 F.3d 970, 981 (11th Cir. 1997); United States v. Smith,
934 F.2d 270, 275
(11th Cir. 1991)) ,
[t]o prove a conspiracy to commit wire fraud, the government need
not demonstrate an agreement specifically to use the interstate wires
to further the scheme to defraud; it is enough to prove that the
defendant knowingly and voluntarily agreed to participate in a
scheme to defraud and that the use of the interstate wires in
furtherance of the scheme was reasonably foreseeable.
We will address each Appellant’s arguments individually.
1.
As to Count I’s charge of conspiracy to commit mail, wire, and insurance
fraud in violation of 18 U.S.C. § 371, Broughton argues that the Government
provided insufficient evidence that 1) he conspired to achieve an unlawful
objective or his voluntary participation in such a scheme, 2) that Financial
Capital’s financial statements were relied upon by any of Premier’s investors, 3)
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that the Gatun CDs were worthless, or 4) that any of the participating companies
had been fraudulently capitalized.
Furthermore, arguing the Government’s theory was that Broughton “had
issued fraudulent financial guarantees and . . . offered bogus assets for rent to
enhance capitalization for certain companies,” Broughton counters that the
Government provided no evidence of such allegations. Instead, he claims that the
Government failed to provide evidence that “he [had] rented bogus assets to
capitalize his own two companies,” or that those companies were improperly
capitalized by the ET&T Treasury notes or the Factor Mex CDs. Similarly,
Broughton claims that Financial Capital’s guarantees were not provided to
Premier’s investors to demonstrate Financial Capital’s own assets, but instead
the insurance provided by Roelofs Insurance. As such, Broughton’s claim rests
upon his argument that mere issuance of financial guarantees by Financial
Capital and Synergy Capital under his signature cannot demonstrate knowing
participation in a scheme to defraud Premier’s investors. Broughton’s
contentions, however, are undermined by the nature of Financial Capital’s
guarantees, his communication with Premier’s investors, and his
communications with his co-conspirators.
The evidence at trial demonstrated the purpose and reach of Financial
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Capital. It was a company designed to lure innocent individuals and investors by
purporting to provide financial guarantees. In truth, though, the financial
guarantees it made were not worth the paper they were written on, as Financial
Capital itself possessed no assets, as testified to by both Connally and Plummer.
Nor did the companies claimed by Financial Capital and Broughton as
participants, many of which were predicated on false financials concocted by
Zapetis and Carazo, possess any assets that could be used to satisfy those
financial guarantees. These facts were testified to, at length, by both Connally
and Plummer. Such testimony is sufficient to have established Broughton’s
knowledge of the nature of the conspiracy at issue. United States v. Allison, 908
F.2d 1531, 1533-34 (11th Cir. 1990) (“There is little doubt that a co-conspirator's
statements could themselves be probative of the existence of a conspiracy and
the participation of the defendant and the declarant in the conspiracy.”) (quoting
Bourjaily v. United States,
483 U.S. 171, 180 (1987)).
Indeed, it is fair to say that Financial Capital was set up to take money in,
but not to pay any out. Proof of this can be seen even in agreements entered into
between Broughton and Zapetis. For example, when entering into its agreement
with Inversiones, Financial Capital mandated numerous steps that had to be
taken in the event an individual demanded payment on the Financial Capital
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guarantees. Such steps included drawing upon a Financial Capital reserve
account that did not, in fact, exist; calling on participating companies to
contribute on a pro-rata share, notwithstanding the known under-capitalization of
those companies; gaining financing on Financial Capital assets, which were
actually inflated to appear greater than they were; and reinsurance, which even
an employee of Financial Capital like Plummer testified he had never been able
to verify existed. Financial Capital’s financial health was designed to be
dependent on such fallacies, for it was only by avoiding payments that it could
conceal its lack of capital assets.
If there were any doubts about Broughton’s state of mind and his
knowledge of Financial Capital’s fraud, they would quickly be dispelled upon
consideration of the IRS’s undercover investigation. In recorded conversations
that were provided to the jury, Broughton explained the way in which financial
statements could be manipulated to make it appear that purported insurance
companies possessed far more assets than they in fact did. Such conversations
were intended by Broughton to convince the undercover agents that their
purported company, Continental Indemnity, could function similarly to his own
companies, Financial Capital and Synergy Capital. Those conversations could
have reasonably been relied upon by the jury in determining Broughton’s own
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intent in establishing and operating Financial Capital and Synergy Capital.
As a final matter, because Broughton elected to testify in his own defense,
the jury was entitled to make its own credibility determinations regarding
Broughton’s testimony and demeanor. United States v. Brown, 53 F.3d 312, 314
(11th Cir. 1995). Broughton testified that he never paid “Michael Zapetis, Karen
Carazo Zapetis, or any of their companies or employees any money in exchange
for the use of CDs or other capital assets.” He testified that he never knew
Richard Peterson nor Richard Solomon. He also testified regarding the assets
claimed by Financial Capital, the participating companies in Financial Capital’s
guarantees, and that, when assets were assigned to Financial Capital and
Synergy, “they would be an asset of the company, and according to the formula
of a call . . . [Financial Capital and Synergy Capital] could hypothecate them to
borrow money.” Moreover, he disavowed any knowledge of fraud or fraudulent
intent, speaking specifically to the letters he sent out to Premier’s investors. He
testified that those letters were not intended “to lull [Premier’s] investors to take
no action about their investments.” Such was his right.
However, in finding Broughton guilty, the jury necessarily found
Broughton to be not credible and, presumably, discounted or disbelieved his
testimony. Such was its right, Brown, 53 F.3d at 314, especially in light of the
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substantial evidence to the contrary introduced by the Government.
Accordingly, given the entirety of the evidence put forth before the jury,
we have no difficulty in affirming the district court’s denial of Broughton’s
motion for acquittal on Count I.
2.
Like Broughton, Peterson argued that his motion to acquit should have
been granted due to the insufficiency of evidence relating to Count I. His
primary contention is that the insurance cooperative was legitimate and that there
was insufficient evidence that he had knowledge of fraud.
Consideration of the underlying evidence in conjunction with the required
elements that had to be proven at trial compels us to deny Peterson’s argument.
There is simply no dispute that Peterson, with the help of Connally, purchased an
offshore corporation, Star Insurance, from Zapetis, as well as its subsidiary, Cap
Tres. Nor is there any dispute that he funded those corporations with assets
rented from Zapetis and Carazo, namely the Gatun CDs. In fact, once it was up
and running with its fraudulently capitalized assets reflected on its balance sheet,
Star Insurance underwrote insurance coverage and collected premiums, never
having the assets necessary to satisfy any claims that might have been filed.
Moreover, there was ample circumstantial evidence from which the trier of
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fact could have concluded that there were insufficient assets. Most obviously, he
purported to purchase a company that allegedly had $30 million in assets for less
than one percent of those assets’ value. Such a sale defies logic and undermines
any claim of innocence.
Moreover, Peterson sought to cover his tracks. Whether it was through his
purchase of the initial option on Star Insurance by handing Connally a briefcase
full of hundred dollar bills; his appointment of Connally to be the nominal head
of the company because of the difficulties Peterson had previously had with
California regulators; or his underwriting of insurance policies for Star Insurance
under the alias of “Richard Snyder,” these actions can be understood as
circumstantial evidence that he knowingly participated in the conspiracy to
defraud and was aware of the illegitimate nature of, at least, Star Insurance. See
United States v. Gold, 743 F.2d 800, 825 (11th Cir. 1984) (quoting United States
v. Freeman,
498 F.2d 569, 576 (2d Cir. 1974) (holding efforts to conceal a
conspiracy may support the inference that defendant knew of the conspiracy and
joined while it was in operation).
Even more compellingly, Peterson’s interactions with the undercover
agents demonstrate Peterson’s knowledge of the fraud in which he was involved.
After being put in touch with the undercover agents by Connally, Peterson told
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the agents that he would handle their record keeping in relation to the company
the undercover agents had set up with Zapetis and capitalized with the same
rented assets as those used by Peterson himself. He evidenced his understanding
of the nature of those assets when he informed the undercover agents that he
would keep an eye on those assets and be prepared to advise about cancellation.
Moreover, he made clear that this type of management was something he was
accustomed to doing with his own company, Star Insurance.
Such evidence is sufficient to demonstrate that CRSC and Star Insurance
were illegitimate, and that Peterson, as their real owner, knowingly directed
those companies’ fraudulent actions. Accordingly, we deny Peterson’s appeal as
to Count I.
B.
Finally, we turn to Appellants’ contentions regarding Count II. Unlike the
statute upon which conspiracy charge in Count I is based, which required an
overt act be committed during the course of the conspiracy, Count II has no such
requirement. Instead, under 18 U.S.C. § 1956(h), only two elements of a
conspiracy need be proven: (1) agreement between two or more persons to
commit a money-laundering offense; and (2) knowing and voluntary
participation in that agreement by the defendant. United States v. Johnson, 440
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F.3d 1286, 1294 (11th Cir. 2006). Count II alleged that Broughton and Peterson,
among others, had conspired to commit a money laundering offense, in violation
of 18 U.S.C.
§ 1956(a)(2)(B)(I). The defendants were charged with doing so by
. . . transport[ing], transmit[ting], and transfer[ring], and
attempt[ing] to transport, transmit, and transfer funds from a place
in the United States to and through a place outside the United States
and to a place in the United States from or through a place outside
the United States, knowing that the funds involved in the
transportation, transmission, and transfer represented the proceeds
of some form of unlawful activity, and knowing that such
transportation, transmission, and transfer was designed, in whole
and in part, to conceal and disguise the nature, the location, the
source, the ownership, and the control of the proceeds of specified
unlawful activity . . .
The specified unlawful activity was identified as mail and wire fraud, committed
in violation of 18 U.S.C. §§ 1341 and 1343. Count II further avers that, in
violation of 18 U.S.C. § 1957, they did also “knowingly engage and attempt to
engage in monetary transactions within the United States, affecting interstate
commerce, in criminally derived property of a value greater than $10,000, such
property having been derived from specified unlawful activity,” again, mail and
wire fraud, committed in violation of 18 U.S.C. §§ 1341 and 1343.
As with our discussion of Count I, we will address each Appellant’s
contentions regarding Count II individually.
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1.
Broughton’s primary contention regarding the sufficiency of evidence in
support of Count II is that the Government did not introduce evidence that any of
the payments made by Broughton were made with funds illegally obtained or
were made to carry out mail and wire fraud. Instead, Broughton argues that there
was an insufficient showing “that the $5,000 check sent by Mr. Broughton from
the United States to Consorcio was for any reason other than preparing 14
participation agreements . . . . [or that] the $50,000 payment to [ET&T] as part of
the agreement for the United States treasury notes was a monetary transaction
with a financial institution or that the $50,000 was derived from a specified
criminal activity.”
We disagree. Having already noted the extensive evidence supporting
Broughton’s involvement in a conspiracy to commit mail fraud, wire fraud, and
insurance fraud, we find further evidence of Broughton’s involvement in a
conspiracy to launder the proceeds of the fraudulent transactions in which
Broughton engaged. Broughton derived income from the fraudulent activities of
Financial Capital and Synergy Capital, and reinvested at least a portion of that
income in the ongoing conspiracy of which he was but one part. Evidence at trial
showed, for example, some of the fees Financial Capital generated from its
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guarantee of Premier. The evidence also showed that payments were made
between Broughton, Zapetis, and Carazo, referencing Premier as the source of
the income for those payments. Additionally, Broughton’s former employee,
Plummer, testified that a $45,000 check written by Synergy Capital to ET&T,
signed by Broughton, was “written to pay for” the purported $100 million in
Treasury bills claimed by Synergy Capital. Notwithstanding Broughton’s
testimony to the contrary, there was sufficient evidence from which a reasonable
juror could conclude that Broughton knew the fraudulent nature of his actions
and willingly participated in the conspiracy to launder money between the many
corporations operated by himself, Zapetis, Carazo, and others.
This cumulative evidence was certainly sufficient to support a conviction
for the offense of conspiring to commit money laundering. Therefore, a jury was
certainly entitled to find that both elements for this type of conspiracy were
satisfied by the Government’s proof. Our case law requires nothing further,
notwithstanding Broughton’s contentions to the contrary.
2.
Finally, we now turn to Peterson’s argument regarding Count II. He claims
both that he lacked specific intent to have committed a money laundering offense
under Count II, and that the driving force of any such actions were taken not by
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Peterson himself, but by Connally.
As a threshold matter, we interpret Peterson’s argument as conceding that
a conspiracy to launder money took place but disputing whether he himself
possessed the specific intent to have participated as required by 18 U.S.C.
§ 1956(a)(1)(A)(1). As such, we need not retread proof of a money-laundering
operation involving Zapetis, Carazo, and the other conspirators. Instead, we need
only address the evidence insomuch as it demonstrates specific intent on
Peterson’s part to engage in that money-laundering operation.
Ample evidence of that specific intent exists. Connally, on Peterson’s
behalf, transported cash to the Cayman Islands, deposited small sums of cash in
American banks to avoid detection, and generally sought to transport cash away
from the domain of the United States. Connally testified that Peterson directed
him to take these actions, and that when he did, he found that, as in the case of
the cash stuffed under the mattress in the Cayman Islands, he was not the first to
have taken such actions.
Equally meritless is Peterson’s contention that he was an unwitting pawn
in Connally’s game. While the evidence certainly supports the contention that
Connally was involved in the fraudulent actions at issue, it was Peterson who
assumed an alias to underwrite insurance contracts; it was Peterson who agreed
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with Zapetis and Carazo to purchase Star Insurance and to rent assets over which
Star Insurance had no right to claim ownership; and it was Peterson who rented
those assets on behalf of the company he controlled behind the scenes.
We reject Peterson’s reliance on cases like United States v. Seher, 562
F.3d 1344 (11th Cir. 2009). There, in the context of a drug conspiracy, we
upheld the sufficiency of the evidence at trial to affirm a conviction for money
laundering.
Id. at 1364-65. Peterson now claims that the evidence relevant to his
own knowledge of the money laundering conspiracy at issue in this case is
significantly less convincing than in Seher. Without passing on the merit of that
contention, we note that Peterson does not argue that there is no evidence; he
only says that “[c]omparing the instant case to the Seher case, it is clear that any
evidence that can be adduced against Peterson is minimal.” App. Peterson Br. at
40. However “minimal” Peterson considers the above evidence to be, we have no
doubt that it is nonetheless sufficient for a jury to have found Peterson guilty of
Count II. Accordingly, the district court properly denied his motion to acquit
because of an insufficiency of evidence.
V.
Having exhaustively reviewed the record and entertained oral argument,
we deny Appellants’ alleged errors and AFFIRM their convictions.
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